Month: July 2018

First, Think Progress IS wrong in their representation. (Think Progress makes the very simple error of acting like an ADDITION to cost is the WHOLE cost.)

HOWEVER, my initial impression was also wrong. My error was a bit more complicated – I assumed constancy in some things that weren’t constant in the Mercatus estimates, and ended up misrepresenting the results, TOO.

So, let’s try to get it right, and we’ll just focus on one year.

Before we hop in, we need to figure out what we’re talking about. We’re going to look at National Health Expenditures (page 5 is my reference here). What this is: Personal Health Care Expenses + Government Administrative Cost + Net Cost of Insurance (Basically, private administrative costs, I would guess) + Government Public Health Activities

Mercatus starts by looking at personal health care expenses in 2022. They suggest these are projected, under our current system, as being $3.859 trillion. (Note: this includes both public and private systems.) With Medicare 4 All, there would be a big jump in healthcare utilization – amounting to $435 billion. This comes from the currently uninsured being covered and from Medicare covering things that some private insurance doesn’t, and from people using more medical care because they are no longer responsible for copays or coinsurance (so, on the margin, they go to the doctor more often – though I suspect this effect is small). BUT, providers would receive less because of M4A’s pay structure. That would cut $384 billion from provider payments, and $61 billion from prescription drug costs. Net effect: personal health care spending FALLS by $10 billion in 2021.

The other change is that total administrative cost is expected to fall by about $83 billion. Basically, we’re eliminating private health insurance costs, but Medicare’s administration would have to eat that up – but with some economies of scale, there would be a net savings on the administrative side.

So, total effect: $93 billion in National Health Expenditure savings. The other years in the estimate project savings of up to $300 billion in NHE by 2031.

Now, Mercatus’s point is that, EVEN WITH this savings, the government would be spending an additional $2.535 trillion that year – since it is absorbing the private insurance industry’s costs. They want to know where the money is coming from, since doubling income taxes on both individuals and corporations wouldn’t be enough to bring in that money.

On the one hand, progressives can reasonably point out that we’re already spending this money, it’s just a matter of redirecting it. And there’s a point in that. This $2.535 trillion is not new to the ECONOMY, it’s just new to the GOVERNMENT BUDGET. Okay.

But, would progressives then suggest that we should just have the government absorb the health insurance premiums currently paid by employees, employers, and individuals? I suspect not. That would mean that each person’s premium would vary not based on income, but on their current employer. This would be an administrative nightmare, I suspect. So, while the money is there, there is still the practical question of how best to collect it in a way that isn’t politically disastrous.

Another big point: Blahous is very clear that he’s being generous in his estimates of savings because he wants to estimate the MINIMUM amount of additional tax revenue that would be required.

To Mises U students – especially those planning to enter economics as a vocation – an autobiographical note:

TL;DR – You’re amazing. Act like it.

After this week, you may feel inspired and overwhelmed. This is normal. It happens to me, too. Still. Every year. The level of interest, talent, and devotion to the study of good economics that I see among the students and my colleagues on the faculty is inspiring. And overwhelming. I know there are many of you – and I’m speaking of the students and young faculty here, not just David Gordon – who have out-read me. Easily. Many – possibly most – are cleverer and more insightful than I. Many of you will out-write me – if you haven’t already.

I write these not as mere empty words of encouragement – I don’t believe in such things. I write them because they are true – and that is something that I find encouraging, and believe you should, too.

I also write these things with very little regret, regardless what the tone may sound like. The reality is that I love my life and the balance that I have achieved between the various aspects of it.

So, here is my advice to you based on my own – admittedly limited, but rapidly becoming less-so – experience:

(1) I was asked today what the threshold of significance is to write a paper and send it to a journal. My answer: Do you think it is worth your time to write it down? If so, then share it. The reality is that, early in your career, you haven’t the slightest clue how significant your ideas are. You don’t have the experience to make that call. That’s what editors and referees are for. So, simply tell yourself that the odds of rejection are fairly high (which is true even for excellent papers, by the way), do your best, and send the thing out. Yes, rejections hurt. Especially the first few. But, you will learn more from being shot down in a rejection than you will learn from any acceptance. Maybe what you learn is that that editor is a jerk, but far more often, you will receive feedback that will help you refine your ideas or the presentation of your ideas.

(2) At first, follow Carmen’s advice I mentioned in another post – that is, add to what the Masters are doing. Expand, explain, defend, and apply (in no particular order). I especially advise doing this with people who are currently alive. One paper I’m still working on connects Mark Thornton’s Skyscraper research with some basic, fairly mainstream, urban economics and Rothbard’s theory of wages. I presented a draft of this paper at the Austrian Economic Research Conference. What happened? Mark Thornton asked me to coauthor a response to a critic of the theory. It should be obvious but, DON’T SAY NO TO THAT. Coauthoring with an established economist is amazing. It’s far less work than working alone. You get the benefit of their name attached to what you’re doing. You get to observe their research process. And you get to build a relationship with them that can lead to further projects.

(3) Get started early. You’re lucky. Austrian economics is still a small field. As a result, we, frankly, can’t afford to be as credentialist as most other fields. You don’t have a PhD. So what? Look at the Quarterly Journal of Austrian Economics. It’s pretty common for there to be articles in there that are not written by PhDs – they might be grad students, or even undergrads. But, they all go through the same double-blind review process. Yes, if you have a PhD, your odds of acceptance are higher – but that’s because people with PhDs probably have more experience with academic writing and publishing than you do. So, get that experience. Read academic articles – I mean QJAE, not Mises Wire, for this purpose – and try to write them, too. You’ll learn.

(4) Go ahead and write popular pieces – like for Mises Wire and others. This is good practice for writing clearly – something that is far too often missing in academic writing. Confession: when I was a Fellow at the Mises Institute in 2004, I spent a great deal of time commenting on the Mises Blog. This caught the attention of Lew Rockwell, who asked to see me in his office. Yes, I thought I was in trouble for not taking the Fellowship seriously, and spending too much time arguing with people in comment threads instead of doing real economic research. Instead, he said he was going to set me up with a password so that I could post on the Mises Blog on a regular basis. This writing was important for my development, as I had to think far more about being sure that I was clear. Now, it’s true, I haven’t written a popular piece – self-published or published by anyone else – in a LONG time. But, that’s not my focus right now, and it doesn’t take away from the fact that you may learn a lot from doing it.

(5) Keep your life in balance. What that means is purely up to you. But don’t wear yourself out, beat yourself up, or put yourself down just because you don’t write 80 pages a day like Murray Rothbard did. You aren’t Murray Rothbard. Now, that doesn’t mean you aren’t as brilliant as he. But, it does mean that you very well may have different preferences. If you do, don’t pretend otherwise. Austrian economics may be a small field – but there are far more of us than there were just 20 years ago (before I even knew of Austrian economics). We each have a part to play in the division of intellectual labor. Take a break when you need to, and let others take on their roles.

It has been 14 years since I was in your shoes. From this side, it’s a very short time. Make the most of your time – whatever that happens to mean to you. I can only hope that, in 14 years, when you have filled my shoes again (and likely have outgrown them!), you will also find yourself inspired and overwhelmed – but, most of all, encouraged by the days ahead and the bright minds that will lead us there.

Well, I’ve been away from home for the past couple weeks, and took a break from my routine for that time. So, the past 3 days have been… a challenge, I’ll say. And it made me realize something.

I hate leg day.

So, today (I’m writing this on Wednesday – which is Leg Day #2 of the week under the routine I’ve been using), I made a decision. I’m not doing it. Now, that doesn’t mean I’m not going to do any more leg exercises – that would be a bit unbalanced. Rather, it means that I’m not doing leg day.

See, I found this routine. It is slanted toward upper-body exercises – which I prefer anyway. Its goal is more aesthetic – which I prefer, too. The split is a bit strange, and it brings back some exercises I’ve not done in basically FOREVER (Rear delt flyes? Been almost a year since I’ve done one of those, I think.).

An important lesson here – which is a continuing theme for me in many ways – if you hate a program, there’s nothing making you do it. You can always choose to do something else.

As I get older (and busier…)- and feel more pressed for time – the more I find myself willing to just stop doing things that I don’t like. In short – I have no moral obligation to have a “leg day”. It doesn’t serve any particular purpose in allowing me to reach my goals. It’s not something that the world needs from me. So, I may as well stop.

It’s been a while since I’ve done a Fitness Friday – honestly, I’ve not had much to say about it, so I decided not to.

Anyway, this week, I’ve had the pleasure at being at Mises University. This is always a fantastic time to connect with other Austrian economists and students of Austrian economics. I was chatting with another of the faculty members, and he was asking if I knew some of the other Austrian or Austrian-influenced economists that graduated from Ohio State. There’s one that works about an hour from me, it turns out, who I had met once before, about 7 or 8 years ago. Anyway, I decided to look him up to see what his current research is. Most of it is empirical stuff (probably why I haven’t seen him in Austrian circles) now, and this paper jumped out at me.

It turns out that exercise does pay. In fact, regular exercise provides something like a 6-10% boost in your wage. Now, we might be tempted to try to explain this away as a result of effects on things like obesity. We know that obesity has negative effects on earnings. So, maybe exercise pays off because people that exercise are somewhat less likely to be obese.

Turns out that’s not the explanation. The study controlled for the effects of body composition.

In other words, regular exercise itself – even if you don’t see “results” in terms of weight, body composition, etc. – seems to have a significant impact on your wages.